Euro zone government bond yields edged lower on Monday ahead of a week packed with event risk, including a Ukraine summit between the United States and Russia and a deadline on a US-China trade truce, as liquidity evaporates.
US President Donald Trump and Russian President Vladimir Putin will meet on Friday in Alaska to try to broker peace in Ukraine, the first in-person meeting between a US and Russian leader since former President Joe Biden met Putin in 2021.
Meanwhile, a 90-day truce in the trade war between the US and China expires on Tuesday. Traders widely expect the pause to be rolled over for another 90 days.
German 10-year yields were down one basis point at 2.68 percent, having ended last week up 1 basis point. So far this month, yields on Bunds, which serve as the benchmark for the wider euro zone, have barely budged.
Two-year yields, which tend to be most reactive to changes in expectations for interest rates, were down 0.5 bp to 1.95 percent. They ended last week with a 5-bp rise, as investors unwound bets on European Central Bank rate cuts.
Analysts argue that with the ECB’s on-hold bias tempering the impact of near-term developments, euro rates are increasingly likely to take their directional cues from the US, where data will be pivotal for Federal Reserve pricing.
